Section 147 : Reassessment – Beyond period of 4 years –Findings in case of another assessee – No failure to disclose material facts – Reassessment was held to be not valid. [Sections 80IB(10) ,148]

12.  Pr.CIT
vs. Vaman Estate [ Income tax Appeal no 678 of 2016, Dated: 27^th November, 2018 (Bombay
High Court)]. 

[ACIT-21(2) vs. Vaman Estate; dated 15/07/2015 ;
ITA. No 5584/Mum/2012, AY: 2004-05 , Bench: F, Mum.  ITAT ]

Section
147 : Reassessment – Beyond period of 4 years –Findings in case of another
assessee – No failure to disclose material facts – Reassessment was held to be
not valid. [Sections 80IB(10) ,148]

The assessee filed on 31.10.2004 declaring total income at Rs. Nil.
In the return of income filed by the assessee for the said assessment year, the
principal claim was of deduction u/s. 80IB(10) of the Act arising out of income
from development of a housing project. In the assessment carried out by the
A.O, he disallowed a part of the claim after detailed scrutiny. Such assessment
was reopened by the A.O by issuance of notice, which was done beyond the period
of four years from the end of relevant assessment year. In order to issue such
notice, the A.O had recorded the detailed reasons. The gist of his reason was
that a similar claim was lodged by one 
Abode Builders for the same housing project. In the course of
examination of such claim of the said assessee, the A.O had detected certain
defects. The A.O had rejected the claim inter alia on the ground that
the development and construction of housing project had commenced prior to
01.10.1998 (which was the crucial date for claiming the benefits u/s. 80IB(10)
of the Act). The A.O of the present assessee, therefore, found that the
assessee was not entitled to the deduction since one of the essential
requirements of the provision was breached. He noted that these facts were not
disclosed by the assessee and not brought to the notice of the A.O during the
assessment. Therefore, there was failure on the part of the assessee to
disclose truly and fully all material facts necessary for assessment.

The CIT(A) observed that during the scrutiny assessment, there was
no failure on the part of the assessee to disclose truly and fully all material
facts. Even on merits, he was of the opinion that there was no evidence to
suggest that the development and construction of the housing project commenced
prior to 01.10.1998. On such grounds, the assessee’s appeal was allowed.

The Revenue carried the matter in further appeal before the
Tribunal. The Tribunal held that in absence of any failure on the part of the
assessee to disclose true facts, the reopening of assessment beyond the period
of four years was not permissible. It is undisputed that in the original
assessment, the A.O had examined the assessee’s claim of deduction u/s.
80IB(10) of the Act at some length. To the extent he was dissatisfied, the
claim was disallowed. Such assessment was sought to be reopened only on the
ground that in case of Abode Builders where similar claim was raised in
connection with the same housing project, the A. O had detected certain
breaches which disqualified the assessee from claiming deduction. Essentially,
according to the A.O, the development and construction of the housing project
had commenced prior to 01.10.1998. The CIT(A) in a detailed consideration of
all the relevant aspects of the matter came to the conclusion that there was no
material to suggest that the development and construction of the housing
project had commenced prior to 01.10.1998.

Being aggrieved with the order of the ITAT, the Revenue filed the
Appeal before High Court. The Court find that the assessee had made full
disclosure of all relevant facts during the original scrutiny assessment. As
noticed by the CIT(A), all necessary facts were before the A.O while deciding
the original assessment. During such assessment, the assessee’s claim of
deduction was also minutely examined by the A.O. Reopening of assessment beyond
the period of four years was, therefore, correctly disallowed by the CIT(A) and
the Tribunal. As noted, the only source available with the A.O to contend that
relevant material was not brought on record by the assessee was assessment in
case of Abode Builders. Here also, there is one vital defect in the logic
adopted by the A.O. We do not find any where any material to suggest that the
development and construction of the housing project commenced before
01.10.1998. Even in the reasons recorded, the A.O has not linked any material
in order to make this observation. He has mainly relied on the findings of the
A.O of Abode Builders. This conclusion was reversed by the CIT(A) noting that
in fact all along there was evidence suggesting that the commencement of
construction of the housing project was some time in the year 2002. It was
pointed out that the assessment order in case of M/s. Abode Builders was set
aside by the CIT(A) and the same was confirmed by the Tribunal. There was no
failure on the part of the assessee to disclose truly and fully all relevant
facts as correctly held by the CIT(A) and the Tribunal pursuant to the detailed
discussion. Therefore, no question of law arises. The appeal was dismissed
accordingly.